The review process is ongoing, but the evidence we have so far on the number of reviews is that it has increased. Out of a potential 3.9 million applications for review, the total number of review applications that have so far been received and processed is less than 200,000. That compares with 50,000 in the previous years. That may partly be to do with heightened concern because of this years events, but the change to borderlining will also have led to a substantial increase in the number 16 Dec 2008 : Column 999
of reviews. I cannot give the hon. Gentleman an answer as to which of those two things has been more important, but I shall keep him and the House updated on those figures.

I will also ensure that the procurement process is properly managed. Indeed, I hope that the letter from Lord Sutherland that I have released today, which says that he will continue to oversee how the procurement works, will give the hon. Gentleman some assurance.

The hon. Gentleman is right to say that this was a case study in poor risk management. That is made very clear in Sutherlands report, but it is also clear that the contract was delivered at arms length from Ministers by trusted delivery partners in the QCA and NAA. On repeated occasions, the QCA and NAA at executive level failed to escalate risks upwards to the board and to Ministers, who were given repeated assurances that things were okay when they were not. Those executives then failed to follow up problems when they were identified. I read out the quote from Lord Sutherland because it is telling. It points out that time and again during 2008 my officials and Ministers raised questions with the QCA and were reassured that things were okay.

Usually, it was the chief executive of the QCA, Ken Boston, who responded, but sometimes it was the managing director of the NAA, David Gee. Whichever it was, they reassured us that things were on track. As Sutherland says, it was only on 30 June that it was brought to our attention that tests were being delayed

Mr. Laws:
No, it was not.

Ed Balls:
Well, I advise the hon. Gentleman to read the Sutherland inquiry. It says, in terms and as I quoted in my statement, that in practice it was only on 30 June that Ministers were informed by the QCA that there would be delays in the tests. There was a meeting on 17 June, as my right hon. Friend the Minister for Schools and Learners asked for a meeting with David Gee and Ken Boston because he was concerned about the advice that he had had from DCFS officialsnot from LEAs or the QCA. My right hon. Friend asked for that meeting, in which Ken Boston deferred to David Gee who assured my right hon. Friend that things were on track. In retrospect, David Gee got that badly wrong, but it was our job to ask our delivery agent to deliver. We regularly asked questions and we were told that they were delivering. It is all substantiated in the report.

The delivery failure was by the QCA and the NAA, and Lord Sutherland is very clear on that point. Ken Boston said in his evidence that the information that was being made available to him was also being made available to Ministers and our Department. The problem wasas the report makes clearthat he did not have a management system in place that meant that concerns in the NAA were escalated up to him. In fact, months earlier, the NAA had a red risk rating and put scores of its own staff in to run the ETS contract, while telling Ken Boston that things were okay. But when he knew about the red risk ratings he did not act, and he assured us that things were okay. We did not have all the same information, but in any case it was his responsibility to act and he did not do so. That was the problem, and that is why the suspensions have occurred. That is why the inquiry was carried out, and that is why Sutherland says that while the primary responsibility was with ETS Europe, there was a failure on the part of the QCA to deliver.

16 Dec 2008 : Column 1000

There was a fundamental failure of the QCA to deliver, but with a new chair, an interim chief executive, these recommendations from Lord Sutherland and this independent report, we can move forward. That is what we are determined to do.

Mr. Barry Sheerman (Huddersfield) (Lab/Co-op):
My right hon. Friend will know that the Children, Schools and Families Committee is undertaking an ongoing investigation into these matters, which also takes in the contract for education maintenance allowances. As part of that, we will take evidence from Ken Boston and Lord Sutherland in the new year.

May I ask my right hon. Friend just two questions today? First, we all understand the game of Get the Secretary of State that is being played between the parties, but does he regret

Daniel Kawczynski (Shrewsbury and Atcham) (Con):
What a ridiculous thing to say. It is not a game.

Mr. Sheerman:
I just want to ask three questions

Mr. Deputy Speaker:
Order. There has just been 50 per cent. inflation in the hon. Gentlemans demands. I am anxious to have single questions as there is important business still to be transacted in the House.

Mr. Sheerman:
I just want to ask the Secretary of State whether he now regrets the advice that he was given to publish 90 per cent. of the tests immediately. Does he think that that would have solved the problem? Does he think that too many cooks spoiled the broth, because of the shadow authority? Thirdly, will he say one word about Ken Boston, who I have found to be a fine public servant in my experience as Chairman of the Select Committee? Ken Boston might have made mistakes on this contract but somebody should say that he is a fine public servant. He might have made a mistake, but we should not forget his record over a number of years of change to qualifications and to the curriculum in this country.

Ed Balls:
I am happy to put on the record my thanks to Ken Boston. I worked with him over the past year and a half and thought that he delivered the key stage 3 reforms, which have been widely welcomed in schools, extremely well. We never had a difficult word, but I regret, as does Ken Boston now, that when he gave me reassurances in face-to-face meetings that things were on track, that turned out not to be the case. I am very sorry about what has happened today, but we are where we are and we have to move forward.

I know that the Select Committee is doing its review and I will ensure that my more detailed response is provided to my hon. Friend so that we can give evidence to that Select Committee. I hope that by then the Opposition members of the Committee will have had a chance to study it, because that might mean that they will be rather more informed in their barracking in the Committee.

I do not accept the point about the shadow authority, but I accept the point about too many cooks spoiling the broth. The NAA was a division of QCA, with no separate independent function. The QCA chief executive was responsible to the board for the delivery of tests, 16 Dec 2008 : Column 1001
not the NAA, although the NAA was a member of the executive board. The QCA has today taken the step of removing the NAA label, which, I believe, got in the way. Sutherland makes it very clear that that label confused accountabilities and allowed Ken Boston to manage things at arms length, which was not the right thing to do. My hon. Friend is right on that point.

Sutherland makes it clear that it was a problem when the regulator was within the QCA and not a distinct organisation. The appointment of an independent regulator in the form of Ofqual represented a significant step forward, and Sutherland says that that has made things better. They will be better still when we finally have the necessary legislation on the statute book. We can do certain things now to implement Sutherlands recommendations, but there is no evidence in the report that the establishment of Ofqual in shadow form made things worse. In fact, the Sutherland report shows that it made things better over the past few months.

Mr. Tim Boswell (Daventry) (Con):
The Secretary of State will be aware that I previously served as a Minister in his Department. We had our share, too, of administrative difficulties of the kind that he has described today, although not on the same scale. Will he reflect first on the fact that non-departmental public bodies should never be used as a smokescreen for any inefficiency on the part of Ministers? Secondly, will he at least search his conscience to satisfy himself, because if everybody else has failed, it is miraculous that Ministers have somehow absolved themselves from any share of the blame? Finally, and much more importantly as we look forward, will he explain to the House why, if he and his senior management were free from blame, the situation is likely to be different on any future occasion when it comes to reporting, asking the salient questions and getting the right result?

Ed Balls:
I searched my conscience, and I also asked Lord Sutherland to carry out an independent review. Not only did I search my conscience, but I read that review, which clearly states that the way in which we set up the arms length relationship with QCA was right and normal practice and that the blame lies in the failure of risk management and the escalation failure in QCA and ETS. If the hon. Gentleman can find in the copy of the report that he has in front of him a quote that shows that I failed in my duty as Secretary of State, he should read it out. His Front-Bench spokesman failed to make any such point

Michael Gove:
Answer the question.

Ed Balls:
I have answered the question so many timesit is so trivial.

I have searched my conscience. I asked for an independent report and I have responded to it. The implementation of the reports recommendations will ensure that such things will not happen again. The right way to proceed was to commission an independent inquiry, to read the report and to act on it. That is what I am doing and that is why my conscience is clear.

Mr. David Chaytor (Bury, North) (Lab):
Given the difficulties this year, particularly those about the number of opinions and the changes to the borderlining practice, 16 Dec 2008 : Column 1002
is there any point in publishing the key stage 3 results on a school-by-school basis? Should we not now simply put key stage 3 to bed and forget about it? On key stage 2, does the Secretary of State accept that it is possible to support a policy of national testing without requiring every child in every school to sit a test every year in each of the key subjects at the same time? There are other forms of perfectly valid national testing that could be more effective and would certainly be cheaper. On the NAA, the Sutherland inquiry refers to the ambiguous relationship between the NAA and the QCA. Will the Secretary of State assure the House that there will be no ambiguity whatever in that relationship in the new legislation that will disaggregate the QCA?

Ed Balls:
I shall definitely ensure that there is no ambiguity. We will use the processes that we are now going through with the expert group to ensure that what we do is not only cost-effective but effective in the way in which we test. That is our challenge. On my hon. Friends particular point, we will publish the national figures for key stage 3 results. Given my announcement in October, I do not think that it makes sense to put schools through the process of checking the individual results school by school and so it is not my intention to do so.

Mr. Edward Timpson (Crewe and Nantwich) (Con):
The Secretary of State is right to characterise this whole sorry episode as a complete failure that has let pupils down very badly. As the right hon. Gentleman is lending a great amount of weight to the recommendations in the report, will he look again at the EMA payments and the delays and consider whether a separate independent inquiry should be forthcoming in that regard? Recommendations might well flow from such an inquiry that he would want to take on board.

Ed Balls:
That issue is currently being looked at by the Select Committee, which is the right forum for that purpose. What has happened with the EMAs has been unacceptable, but it is clear why it happened and the Select Committee will consider the subject. I do not think that an independent review is the right way to proceed, but I am happy to listen to and give evidence to the Select Committee to ensure that if there are any lessons to be learned in the case of EMAs, we will learn them.

Fiona Mactaggart (Slough) (Lab):
The Secretary of State said in his statement that Lord Sutherland concluded that the procurement procedure was sound, yet it is clear from the report that although the procedure underwent two OGC gateway reviews as well as the expensive involvement of PricewaterhouseCoopers, the procedure did not produce good value for money for the taxpayer. Is there not an issue about the entire procurement? What steps will my right hon. Friend take to ensure that the Government learn the lesson from this procurement exercise and ensure that we put more emphasis on good value for the taxpayer in the future? What action will he take to ensure that pupils, schools and markers feel confident in next years tests?

Ed Balls:
My hon. Friend is right to stress pupils, schools and markers, because markers had a raw deal in the summer. The customer service to markers from 16 Dec 2008 : Column 1003
ETS was frankly unacceptable and that must improve in the future. That is why we are returning to the tried and tested methods with the previous deliverer of the tests, Edexcel, as announced yesterday by the QCA. I will ensure through the work that we will now do with the OGC that if there are wider lessons to be learned on procurement, we will learn them.

It is the case that Lord Sutherland says that the procurement procedure was sound, and he explains why in detail, but we must do everything that we can to deliver value for money. One thing that would definitely not have delivered value for money would have been to forfeit the £24 million that the taxpayer got back. That would be to give in to the Oppositions irresponsible political posturing, which I was completely right to ignore.

Mr. Graham Stuart (Beverley and Holderness) (Con):
May I begin by congratulating the Secretary of State on saying sorry today? He was unable to bring himself to do that in October, and I am sure that his apology will be appreciated.

The report comments on the responsibility of Ministers and, as both Opposition Front-Bench spokesmen have noted, on page 37 it quotes Ken Boston as saying that

ministers and officials had access to exactly the same data and information as the NAA and the QCA; they were active participants in the process...and in no way at arms length.

That is what Ken Boston said: was he lying?

Ed Balls:
It was said by Ken Boston, who was suspended this afternoon by the QCA board on the basis of a report that said that Ministers were not properly informed. It also said that information was not provided properly by the NAA to the QCA executive, by the QCA executive to the board, and by the QCA executive and the board to Ministers. We had reassurances that things were okay, even though the NAA had information that they were not. [ Interruption. ] If he wants to, the hon. Gentleman can quote again and again from the remarks that Ken Boston made to Lord Sutherland, but I think that those remarks reveal the nature of the problem and why we needed to act. That is what we have done.

Rob Marris (Wolverhampton, South-West) (Lab):
The QCA appears to have failed, and it seems that it is going to be transformed into two quangos. The Learning and Skills Council seemsto me and many others, and I think to the Governmentalso to have failed, and it is to be transformed into three quangos. One of them will rejoice in the initials SFA, and one wonders what it will do. I am confused about the approach adopted by the Department for Children, Schools and Families and the Department for Innovation, Universities and Skills as, when quangos fail, they seem to be replaced by new and more quangos. Can the Secretary of State explain that to me?

Ed Balls:
I can explain that to my hon. Friend. There was a body called the QCA. That single body was responsible for the procurement, management, delivery and regulation of tests and, clearly, it did not succeed. We have decided to have one organisation to procure, manage and deliver the tests, and a separate organisation independent of Government called Ofqual to regulate them. [ Interruption. ] I thought that the Opposition 16 Dec 2008 : Column 1004
supported the establishment of Ofqual, although the comments being made by Conservative Members suggest otherwise. However, it is right to split delivery and regulation, and that is what we are doing. Lord Sutherland makes it clear that, in his view, that approach will strengthen the regime and lead to more confidence for teachers, pupils and markers in the future.

In this case, I believe that we are doing the right thing, although I agree that the proliferation of quangos is not always ideal.

Angela Watkinson (Upminster) (Con):
The number of papers with questionable results that have had to be returned this year has increased dramatically this year, and that has caused huge anxiety among pupils and imposed an administrative burden on schools. Will the Secretary of State ensure that his proposals will not also be a financial burden on school budgets?

Ed Balls:
The position is clear: a school pays a financial penalty only if a review is unsuccessful. That is an important principle, as it means that it is not possible for there to be review after review. If there were no financial cost to a litigious review, everyone would appeal. We have had 200,000 reviews this year, compared with 50,000 in 2007, and it is estimated that a further, and final, 18,000 review outcomes will be issued to schools. The rise is partly due to concern about test marking, although in her letter to me today the head of Ofqual makes it clear that she retains the view that she expressed in Julythat marking standards were maintained and that there was no decline in marking quality.

The review process will continue and, as I have said, we decided some years ago to remove borderlining. Its abolition means that cases that in the old days would have been allowed a bit of an upgrade do not receive one now. That will have led to an increase in the number of reviews, but it is really important that the review process is undertaken properly and with integrity. A school that succeeds does not pay the fee, whereas one that fails does.

David Taylor (North-West Leicestershire) (Lab/Co-op):
It is certainly true that faith among teachers, parents and families in national curriculum testing has been badly hit by what has happened. Further to what my hon. Friend the Member for Slough (Fiona Mactaggart) said, it is hard to conclude that the procurement procedure was sound, when the reputation and track record of ETS and the capacity of its staff were not flagged up.

The dogs that did not bark seem to have been the OGC and its gateway reviews. That body had similarly lamentable failures with the Rural Payments Agency saga some time ago, but another problem has to do with PricewaterhouseCoopers. Will the Secretary of State say whether there exists in the public domain copies of the brief given to PricewaterhouseCoopers and of the report that was received from the companyno doubt at some great cost that we shall never know?

Ed Balls:
At paragraph 2.59 of his report, Lord Sutherland says that

the procurement procedure followed by PricewaterhouseCoopers and NAA on behalf of QCA was sound. It used the most up-to-date technique, Competitive Dialogue, which enabled QCA to refine its requirements and suppliers to develop their proposals during the procurement exercise.

16 Dec 2008 : Column 1005

That was then endorsed by two OGC reviews. I have found no reason in the Sutherland inquiry to fault PricewaterhouseCoopers, other than the fact that there should have been the exercise of wider due diligence that should have been picked up by the OGC. That is one of the recommendations that I am acting on.

As for the wider financial information about PricewaterhouseCoopers, I shall have to come back to my hon. Friend the Member for North-West Leicestershire (David Taylor), as I do not have the answer in front of me. [ Interruption. ] I do not have the answer in front of me, so I shall have to get back to my hon. Friend.

I asked Lord Sutherland to look at procurement in 2009. He has done so, and in his letter to me he says: